Member-Focused Innovation and Growth

For Gym Operators

Member-Focused Innovation and Growth

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Let’s take a deep dive into the social and behavioral science behind crafting world-class customer service. Learn how to understand value curve thinking as a way to develop your club’s strategic planning for innovation and growth, as a powerful tool for breakthrough thinking. Use the GAPS model to evaluate the “gaps” between members’ expectations of services and their perception of services. Ultimately, member satisfaction depends on the gap between the two. Discover low-cost investment initiatives that can increase service quality.

The following is a summarization of an education session from the 2016 IHRSA Convention, produced with full permission from IHRSA. The full-length video is available for purchase at ihrsastore.com.

About the Speaker

Dr. Sridhar Balasubramanian ("Dr. B") is the Senior Associate Dean for MBA Programs, Roy & Alice H. Richards Bicentennial Distinguished Scholar, and Professor of Marketing at the University of North Carolina at Chapel Hill's Kenan-Flagler Business School

Two Methods to Craft and Deliver the Highest Quality Services

When operators look at how they can innovate to grow their business, the discussion often starts with what types of services to add. They’ll add new types of fitness programs, equipment, etc. However, the most powerful way to think about business growth and innovation is not what products and services to add, but to consider the member experience. What can club owners ultimately do to create high quality member experiences?

Look Outside the Industry

Companies often make the mistake of looking at similar businesses or within their industry to find benchmarks and ways to improve their quality of service. The more innovative thoughts and lessons come from when we look outside of our industry. By looking “outside”, club owners and gym operators take away valuable insights in how to craft and delivery world-class service.

Outside the Box Thinking

Clubs can learn to innovate by systematically thinking outside the box. Out-of-the-box thinking is more often associated with free-form than a systematic approach. However, if we don’t condition ourselves to consistently and systematically think outside of the box, then it is just a random occurrence. Club owners need to learn how to systematically invoke the power of out of the box thinking for when they need it to work for them.

Six Approaches to Innovation through Member Services

1. Employee-Focused Design

This approach is based on a service-profit chain model. It’s common for organizations to consider first how to improve external service quality to drive customer satisfaction and customer loyalty. However, designing for innovation and growth begins with your employees. Start from within and develop the highest internal service quality for your employees. This will carry far greater influence on your club’s member satisfaction and business overall. Consider your level of internal service to your employees:

How long does it take to respond to an employee’s idea or complaint?

Are your employees satisfied?

Do you have high staff turnover?

Invest in your employees. You can make the choice to treat employees as expenses or as assets. Do you provide additional training and education for your staff? Do you send them to industry conferences to learn about the industry and current trends? Employees will be proud to impart their knowledge to members. Empower them. This in turn will delivery greater levels of quality service.

In gaining employee satisfaction, loyalty, and productivity, it will ultimately become in the end the driver of your club’s external service quality.

2. Service Quality-Focused Standards and Design

How do members evaluate service quality? Research shows regardless of the industry there are five key drivers of customers’ perception of service quality.

Reliability – This is the ability to deliver the same consistent experience to your members every visit. Members want to know they can count on receiving the same level of quality service every time they enter the club. How dependable is the club in handling customer service problems? Reliable service quality means clubs perform promised services dependably and accurately across all clubs or gym facilities.

Assurance – Clubs need to inspire trust and confidence. Employee knowledge and courtesy is critical to their ability to inspire trust and confidence of members. Members are coming because they want to achieve better health and fitness. How good are staff at developing programs to fit their needs? After interacting with a personal trainer do members feel confident they have the best program designed for them to meet their goals? Customers care about assurance.

Tangible – These are areas that members touch, feel, and see. Facilities should have quality lighting, proper functioning equipment, and be well-kept and clean. Staff should have a professional appearance. Members want to enter an inviting environment, not only on a human level, but also physically. Do you have inspiring artwork hanging on the walls?

Empathy – Do members believe that staff truly care about their health and fitness? Are staff and management considered genuine in their approach and interactions to help members? Do employees help with any problem that requires attention without considering if it is part of their role or responsibilities? This is the caring factor. The importance here for operators is to take the time to hire the right people, because the wrong people will have a greater negative effect on your members’ enjoyment and satisfaction, not to mention staff morale.

Responsiveness – This is the willingness for your staff to provide prompt service to members. How quickly do management or staff solve a member’s problem? It is essential to have responsive communications with members on changes to policies, programs or schedules.

These five key drivers can be used as a comprehensive 360° service quality review of your club. To test and rate your club’s service quality translate each aspect above into a 1-7 point scale to provide a well-tested service quality measurement metric for your club.

3. Member Experience-Focused Standards and Design

This element of service quality draws on the psychology of the member’s experience. The important nature of customer experience is related to a specific pattern tracked over time. The pattern has a large impact on a member’s experience. For example, how do they feel at the end of their workout or when they leave the gym?

The member experience is tracked over the length of time of a visit to the club against the level of the quality of service. The pattern is created from the lows and highs of the member’s experience until they exist and it is the end of their service experience.

Given any service experience pattern, there are four drivers that influence a member’s memory of their experience.

People always remember their worst experience.

People always focus on their last experience.

People remember their best experience.

People consider the trend – is it getting better overall?

Can you design and influence the pattern for a member’s experience from the time they walk in, through their visit, to when they leave?

Strategically build in peak experiences.

Avoid deep lows.

End with a bang.

Overall create a positive trend for a member’s time in the gym.

Look at how you can create peak experiences for members during their workouts and their visits. Make sure there is a special gesture before they leave the club, such as a staff member that greets them when they arrive and when they leave or a fresh bowl of apples they can grab on their way out. Make sure they leave positive to guarantee better member quality service perception.

4. Member Service Blueprint

The concept of a service blueprint is to design a grid of services broken down into categories. First is physical evidence: what a member sees, feels, touches, etc. Next is customer actions: when a member checks in, enters the changing areas, uses the equipment, takes a class, etc. Customer actions are divided into two zones. The “onstage” or “contact” zone is where there is a direct interaction between a member and staff and the “backstage” zone is where indirect interaction happens between member and staff. This includes interactions on a website, telephone, social media pages, etc. Last is the service support process: club functions that members do not see.

To use the service blueprint model, map out every aspect of your services that have contact with the customer. Following are some examples:

Exterior Environment – What is the appearance of the club when members approach?

Entering – Is there a high-quality greeting? Is the member recognized by their first name?

Readiness – Can staff bring up a profile? Does the personal trainer have their workout program ready? Are towels available?

Responsiveness – How quickly do these interactions take place?

The power of the service blueprint lies in carefully looking at everything that takes place at every point of the experience. More interestingly, look at how to link what happens at early points of a member’s visit with what happened in the later parts of the visit to create the magic in your quality service.

5. Add Some Drama

Great quality service resides in the intersection between efficiency and drama. Managers often look at how they can deliver highly efficient services. Without compromising value, infuse drama into the mix. Many of the world’s greatest services blend both drama and efficiencies. Dramatic elements help to invoke emotion, differentiate your club, and are memorable.

6. Physical Environment-Focused Standards and Design

This last approach involves a holistic view of the physical and professional environment of the club. People interpret meaning into things they don’t see from those they do. It’s important, therefore, that a club provide strong “evidence” of its values and strength of assuredness. “Evidence” management is an approach to present to members clear evidence of a club’s capabilities.

A good organizational culture is critical to great service quality. The success of a brand or business is not their equipment or services, but their people. Anyone can buy the same fitness equipment, design a gym, and offer personal training and group exercise programs. However, it is very difficult to replicate a corporate culture. Your club’s unique culture can deliver sustainable competitive advantage with respect to your competition.

Silo Busting

Develop a culture where any one member’s problem is everyone’s problem. We’ve all experienced being told by an employee that they couldn’t help and they transfer you to someone else. A member should not be redirected when they’re calling for a scheduling question or information on a certain program. Organizations that are very customer focused don’t work in silos. They work as one with everyone focused on the customer. Encourage your managers and staff to create an environment in which they work as one whole entity with a focus on the member.

Your Club’s Story

Build a strong, healthy corporate culture with strategic storytelling. Uncover the stories that showcase your culture and that remind staff and members of the service standard the club stands for. Build a collection of stories that tell the inspiring, empowering and heartfelt things your staff or organization has done for members, the community, or for each other. Use these stories to demonstrate what your club is all about.

GAPS Model of Service

Ultimately the level of member satisfaction depends on the difference between members’ perception of service and their expectation of service. Envision member expectations at the bottom of the model and member perception of service at the top. In order to have highly satisfied members, a club has to ensure that member perception of the club’s services is higher than their expectations. Unfortunately, often times this doesn’t happen.

The GAPS model divides the difference between perception and expectations into four sections and creates strategic sub-gaps.

Knowledge Gap – The club perception of member expectations doesn’t match the members’.

Standards Gap – The club understands the member’s expectations but can’t live up to or delivery on those expectations.

Delivery Gap – Despite a club’s good standards of service delivery, staff are not able to meet those standards. Perhaps this is due to lack of motivation, incentives, or leadership. This is typically called the “people gap”.

Communications Gap – The critical action of communicating with members to set the right expectations, lead them through the service process, and influence how they perceive the services. Without this, the club has a communication gap.

Macro Innovation

Quality of service and innovation is critical in order for gym operators to differentiate themselves. The goal is to not only stay ahead of the competition, but to make them irrelevant. For clubs to achieve this they need to develop breakthrough thinking.

Macro innovation is the concept of learning how to systematically think outside the box. This is a powerful tool for breakthrough thinking.

Clubs should create a value proposition that appeals to its members, but also makes sense for the organization.

Does it make sense for members?

Does it make economic sense for the club?

Does it make sense from a business perspective?

Evaluate new ideas through the lens of the member’s perspective as well – the club’s economic perspective. Engage only in those innovative ideas that are perceived as value from the member’s perspective and are economically realistic for the club.

Value Curve Thinking

It’s healthy for a business when owners and managers challenge existing assumptions. Using value curve thinking, gym operators can design and evaluate innovative ideas and new strategies. It is a tool to visually see how an innovation or strategy works in relation to your competitors and the industry.

In thinking out-of-the box, it is important not to conform to the assumptions that govern the fitness industry, but to challenge them. Consider three complementary qualities of your value curve that focus on your best, effective strategy, which differentiates your club and offers a compelling tag line.

Key Points of Value Curve Thinking

Don’t go to members to ask what they care about, because they’ll tell you everything is important. Instead tell customers they have 100 points and ask them to allocate those 100 points across different services.

Managers, left to themselves, will come up with a value curve that has the club world-class at everything. Instead, focus on exceeding at a few qualities that are really important to members.

Create a slogan for the club based on your value curve.

Your Toolkit – Putting the Value Curve into Action

When you get ready to develop your strategic plan start with a value curve analysis. This helps owners and managers focus on the questions that matter most to the business. Ask your team the following questions when setting out to create your value curve:

What do my members need?

Where is the club’s current value curve?

Where is the competition?

Where do we want to be?

To draw your own value curve, brainstorm the different qualities that matter to members. Allocate 100 points across them in order of perceived importance (put those in brackets next to the attributes). List them along a vertical axis. Then mark along the horizontal axis from low to high the extent to which you think they would be viewed from the member’s perspective. Also map the business of two of your closest competitors. Use different colors for each curve. Remember to be as fair and unbiased as possible! Now draw your “proposed” value curve for your strategy or innovative idea.

Avoid These Pitfalls

Beware of the trap in concentrating your efforts on a single focus. Do not overlook the everyday processes when looking out over the horizon. And on the contrary, don’t focus efforts only on tactics without lifting your head to see the big picture.

Duality of Excellence

The most successful executives today are those who are simultaneously strategic and tactical. They have achieved the duality of excellence. Owners and operators must have the ability to look 6-10 years in the future to see that distant tomorrow. At the same time they must possess the ability to execute on memberships, programming, and customer service for the current quarter and year. Gym operators who can think strategically and implement tactical planning will have a far greater opportunity for success.